Hi,
Where to start?
Both Ruby and Rails have major releases pending (Ruby 2 in February 2013 and Rails 4 sometime soon), therefore there is a danger that any books you buy now will date quickly.
Ruby:
I can appreciate that the PickAxe book is a little heavy going, but it has become the de facto Ruby introduction and reference, so I would try and stick with it if you can.
Also, check out Peter Cooper’s “Beginning Ruby: From Novice to Professional”, which is a little more lightweight.
Rails:
For Rails, online guides and tutorials are plentiful. I 'd recommend http://guides.rubyonrails.org/ as well as http://railscasts.com/ (also available as http://asciicasts.com/).
Once you have worked through some of these, then I would go back to Agile Web Development for Rails.
Also, check out this list (which is fairly recent): http://programmingzen.com/ruby-and-rails-recommended-books/